Products offered by the financial industry may be quite complex and difficult to compare from the customer's perspective. There is a wide range of different products available, and customers have individual needs.
These pages present the most common savings, investment and insurance products available in the financial industry, and discuss their characteristics and risks. The products have been grouped into deposits and loans provided by banks; different investment products, such as equities, investment fund units, index loans and investment insurance; long-term pension saving policies as well as different types of life and non-life insurance policies.
Successful selection of investment product requires knowledgeable buyers and expert sellers
The knowledgeable buyer collects information and compares alternatives
The investment horizon, risk appetite, know-how and investable assets all comprise factors that have an impact on the number of alternatives available as well as the final choices made by the investor.
In many circumstances, the service provider is under legal obligation to provide the customer with adequate and material information on the agreement or product well in advance before concluding an agreement or offering a product. However, the customer is always responsible for studying the material related to the product. For example, in selecting an investment, the customer should have a clear and realistic idea about the investment objectives and any issues that should be clarified so as to make an assessment of the risks involved with the investment. Investment decisions should never be made solely on the basis of marketing material.
The investor always has the option of not making an investment if, for example, the terms and conditions of the product are too obscure, the investment decision must be made very quickly or the risks related to the product remain unclear.
Expert seller knows the sale transaction
The service provider must have a clear view about its customer base and about which products are suitable for which customer group. Not all products are suitable for everyone, and not all products should be sold to everyone. Attention should already be paid to these concerns at the early stages of product development.
The service provider’s disclosure obligation includes the conveyance of a true and fair view of the investment. In addition to statutory material, investors are often also provided information deemed as marketing material. With respect to material falling within the scope of the actual disclosure obligation, requirements are specific as to the information that must be given to the investor on the product. As far as marketing material is concerned, regulations do not go into details in a similar fashion but only emphasises that information on different characteristics must be provided in an even-handed manner, and must not be untrue or misleading.
As regards investment insurance, regulations are different. The insurer must provide the policyholder with sufficient information for determining the need for insurance and selecting an insurance policy, but the content of this information is not specified in the law.
19 April 2013